Secret UMC budget calls for no subsidy

Remember this summer, when the D.C. government, led by Attorney General Peter Nickles, seized control of United Medical Center from its former owners, Specialty Hospitals of America LLC? Alarm bells rung in certain corners of District government that were convinced the public hospital business would bring about eventual financial disaster.

Four months later, a quick appraisal seems to show good news at the Southeast D.C. hospital. The hospital remains open, has inked several new partnerships with private-sector health care providers designed to prop up volumes and revenues, and has reopened a skilled nursing home facility on the Southern Avenue campus.

Also, District changes to Medicaid formulas have shifted some revenue away from other hospitals to keep the place open. As has been noted many times before, the fate of United Medical Center will play a huge role in the future of the District and Prince George's County health care providers, who would assume the patient load if it were to ever close entirely.

That's just the background. But if you want to explore the hospital's future, really dig into its finances or put it into the broader context of D.C.’s overall budget problems, then you’re out of luck. The budget proposal for 2011 isn’t public — and we now know that's how it will remain until at least next month.

Even though the newly created governing board, dominated by outgoing Mayor Adrian Fenty's appointees, has reviewed a 2011 budget proposal in two separate public board meetings, asking questions of hospital Chief Financial Officer Derrick Hollings, the proposal itself still hasn’t seen the light of day.

On Monday, hospital lawyer Edward Rich formally denied our Freedom of Information Act request filed Oct. 29, citing the law’s exemptions for intra-agency or deliberative documents. He said the board is likely to approve the budget in “early December" — then it will be public.

Here’s what we do know, based on those verbal descriptions given in public meetings of the private documents: The hospital is projecting enough operational revenue to cover anticipated expenses of about $113 million, with enough left over to pay down old debts.

That’s a crucial fact: On any given day, and unlike in the past, United Medical Center now takes in more in revenue than it spends to provide the care. A general-purpose subsidy from District funds isn’t necessary (though, those enhanced Medicaid revenues are a direct result of changes to District policy that shifted money away from other hospitals.)

"They think they can run this thing without borrowing any more money from the city, and if a lot of things fall into place, they may be right," said Councilman Jack Evans, D-Ward 2, who voiced some of the loudest concerns.

But just because cash flow is positive (a not insignificant accomplishment), that doesn't mean everything's fine. The place still has many old debts, little cash in reserve and a still-developing capital budget. It'll be a while before the ship is completely turned around. So far, the public discussion has not covered the exact financial blueprint of the debt paydown or the cash reserve situation.

Also, as Evans noted, the budget depends on several major initiatives working out as planned. For instance, the hospital's obstetrics department, previously running at nearly a $4 million loss, is projected to break even — if a new partnership with Washington Hospital Center moves 541 baby birth cases into UMC.